We are comforted that updated remuneration and retention agreements have been signed with key investment teams and that cost synergy extraction will be focused on distribution, marketing, and ‘ back of house’ functions. While there have been mixed outcomes from other large-scale asset manager mergers, Perpetual and Pendal share similar investment cultures of excellence, and CEO Rob Adams’ prior experience from Fidante and Janus Henderson should be beneficial. Following the acquisition, Perpetual manages around AUD 200 billion in assets across equities, fixed income, and multi-asset solutions as at 31 December 2022. Australian equities, which once dominated the group, has fallen to around 14% of assets under management. The Perpetual and Pendal Australian equities teams will continue to operate independently, following their own unique processes and style. Global equities is a much larger component at around 32% of group AUM. This is composed of Barrow Hanley, Trillium, and Pendal’s JO Hambro, TSW, and Regnan strategies. Domestic US equities is also a major contributor at around 25% of AUM — managed by Barrow Hanley and TSW. Cash and fixed income now account for around 15% of group AUM. Overall, while the potential for disruption during the integration period is a watch point, we think the larger and more diversified Perpetual Group provides a strong platform for the underlying investment teams to deliver for investors.
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